Global financial markets are shaped by a three-way tug-of-war between Middle Eastern geopolitical conflicts affecting oil and inflation, central bank interest rate policies, and shifting worldwide economic growth forecasts.
Conflict involving Iran, Israel, and the U.S. threatens the Strait of Hormuz—a transit hub for roughly 20% of global petroleum and LNG—which pushes crude prices higher and drives up headline inflation. This triggers short-term safe-haven demand for gold while simultaneously strengthening the U.S. dollar and bond yields, which mechanically weigh on bullion.